LONDON: North Sea Forties crude differentials fell on Monday as competition with other Atlantic Basin grades for buyers in Asia heated up ahead of a hefty November loading programme.
The UK and Scandinavian fields that make up the North Sea crude streams are set to pump more oil in November than at any time in the past two years, the most recent loading programmes show.
Two separate offers for crude loading via ship-to-ship transfers (STS), which often can be symptomatic of oversupply, appeared in the Platts daily trading window.
The arbitrage to Asia has been gradually moving against North Sea sellers as the decline in the Dubai benchmark futures contract has outpaced that of the Brent futures price. The Brent-Dubai Exchange of Futures for Swaps, is close to its highest in five months.
The rise in Brent crude futures relative to Dubai futures makes it less attractive to Asian buyers to import North Sea crude than Middle East or other Atlantic Basin grades.
Differentials for key West African crudes, such as Qua Iboe or Bonny Light, are at their lowest in 3-1/2 months, meaning that Asian consumers are even less likely to gravitate towards the likes of Forties, traders said.
Demand for Forties, the largest North Sea stream, has been fairly robust in October.
Some 12 million barrels of North Sea crude have been fixed to move from the region to Asia in October, of which 10 million has already sailed, or is under way, based on Reuters shipping data. November fixtures show two supertankers booked so far to travel east.
Unipec has chartered the Shinyo Ka Nnika to sail from the North Sea to China in late November, while Vitol has already chartered the Maran Cleo for the same period. Traders said that the Shinyo Ka Nnika may possibly have been booked to carry Urals rather than a North Sea grade.
Russian barrels have been making their way to Europe, vying with Saudi Arabia for market share.
Some 14.5 million barrels of oil have been booked this month to sail to British ports alone, of which roughly half was scheduled to load in either the Black Sea or the Baltic, Reuters shipping data showed.
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